Virginia’s plunging tax revenues thrust to the forefront a looming budget crisis that the state’s next governor will be forced to confront.
Proposing how and where to cut the commonwealth’s $77 billion two-year spending plan is a central duty of the chief executive, yet the topic has been little discussed during the race to succeed Gov. Tim Kaine. When the next governor takes office in January — whether his name is Creigh Deeds or Bob McDonnell — he will inherit massive shortfalls in a budget that already has endured multiple rounds of reductions.
Virginia general fund revenues continued to plummet last month, falling 7.5 percent over the same period last year, according to a report from Virginia Secretary of Finance Richard Brown. The decline reflected a drop in every major source of general fund taxes other than those from payroll.
“All major sources are trailing their respective forecasts through the first quarter of fiscal year 2010,” Brown wrote in a letter to Kaine.
Both Deeds, a Democrat, and McDonnell, a Republican, have rolled out plans to find savings and efficiencies in government. But neither has given a detailed picture of how he would slash state services, as Kaine has repeatedly done.
Kaine last month said he would cut nearly 1,000 state positions — including 593 layoffs — furlough state employees and cut higher education funding to close a $1.35 billion revenue shortfall.
Deeds has argued that McDonnell’s transportation plan would plunge the state into a greater fiscal crisis by robbing the general fund of increasingly scarce dollars, focusing especially on how it would hurt education. The Democrat, if elected governor, would initiate zero-based budgeting and implement a “thorough review” of state agencies, starting with the troubled Virginia Information Technologies Agency, said Deeds spokesman Jared Leopold.
McDonnell has devoted much of the campaign to hitting Deeds on taxes, arguing Deeds would seek to raise them despite the ongoing recession.
“The manner by which we close this shortfall, and create the budget in the years ahead, will determine how Virginia emerges from this recession,” said McDonnell spokesman Crystal Cameron. “Some would argue for tax increases to fill the revenue gap. That is the wrong approach to take, both for our citizens and for our government.”
